Increasing Same Store Sales At Olive Garden Signals Bullish Outlook For Darden Restaurants: Analyst

Wedbush analyst Nick Setyan reiterated an Outperform rating on the shares of Darden Restaurants Inc DRI and raised the price target from $165 to $175.
The analyst's FQ4 Olive Garden checks point to same-store-sales growth at least in line with the consensus of 4.7%.
The analyst said that positive aspects included improved guest counts, sustained levels of off-premise sales, and improved staffing levels.
Based on the checks, the analyst increased FQ4 Olive Garden same-store sales growth estimate to 5.0% from 4.5%.
The analyst also raised LongHorn same-store sales growth estimate to 5% from 4%.
The analyst noted that if no further price increases are implemented, rollover FY24 menu pricing will fall in the 3% range.
The analyst expects incremental price increases to occur and would be surprised if FY24 menu pricing is not at or above 4%.
The analyst also believes incremental marketing spend remains an opportunity management can take advantage of should the need arise.
The analyst raised the FY24 EPS estimate to $8.81 from $8.79 and the FY25 EPS estimate to $9.60 from $9.58.
The analyst expects DRI's category share gains to accelerate in an increasingly uncertain consumer environment, rendering visibility into DRI's ability to achieve or exceed current consensus.
Price Action: DRI shares are trading higher by 1.65% at $161.07 on the last check Thursday.

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